VATupdate

VAT rates in Kenya

Quick overview

Standard Rate Reduced Rate Other Rates
16% 8% Zero-rated (0%) and exempt

The local name for VAT in Kenya is Value-added tax (VAT).

There are basically 2 VAT rates in Kenya:

  • Standard VAT rate is 16%
  • Reduced VAT rate is 8%

Recent developments

For more information about (recent) rate change developments in Kenya, please click HERE.

The rate increased to 16% per Jan 1, 2021. Before that date, the standard VAT rate was 14%.

Standard rate: 14%

This rate applies for all transactions that take place in Kenya, unless an exception applies (such as a reduced rate, the zero rate or an exemption, or a reason to treat the transaction as outside scope of VAT).

Reduced rate: 8%

Examples of goods and services taxable at 8%

  • Motor fuel (regular and premium gasoline)
  • Aviation fuel
  • Gas oil
  • Natural gas

Zero rate (0%)

Examples of goods and services taxable at 0%

  • Exportation of goods and taxable services
  • Goods and services supplied to Export Processing Zones
  • Transportation of passengers by air carriers on international flight
  • Goods and services supplied to Special Economic Zones
  • Supply of liquefied petroleum gas (LPG) (please note that this supply changes from being taxed at the zero-rate, to the standard rate, from 1 July 2021)
  • Supplies to the Commonwealth
  • Supplies to other governments
  • Supplies to diplomats

Examples of exempt supplies of goods and services

The term “exempt supplies” refers to supplies of goods and services that are not liable to VAT and that do not qualify for input tax deduction.

  • Unprocessed agricultural products
  • Direction-finding compasses
  • Passenger baggage
  • Financial services
  • Insurance
  • Medical services
  • Agricultural and horticultural services and animal husbandry
  • Transportation of passengers by any means of conveyance, excluding international air transport or where the means of conveyance is hired or chartered
  • Entry fees into national parks and national reserves

Option to tax for exempt supplies. The option to tax exempt supplies is not available in Kenya.

Source EY

A global VAT/GST rate overview can be found here (note this is a work in progress).

This post was last updated on September 1, 2021.

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